Coordination and Virtualization: The Role of Electronic Networks and Personal Relationships

Robert Kraut, Charles Steinfield, Alice P. Chan, Brian Butler and Anne Hoag
Additional contact information
Robert Kraut: School of Computer Science, Wean Hall, 5000 Forbes Avenue, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Charles Steinfield: Department of Telecommunications, Michigan State University, 409 Communication Arts and Sciences Building, East Lansing, Michigan 48824
Alice P. Chan: 331 Kennedy Hall, Cornell University, Ithaca, New York 14853
Brian Butler: GSIA, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, Pennsylvania 15213
Anne Hoag: College of Communications, Pennsylvania State University, University Park, Pennsylvania 16802

Organization Science, 1999, vol. 10, issue 6, 722-740

Abstract: One view holds that organizations are virtual to the extent that they outsource key components of their production processes, and that electronic networks make it easier to do this. The goal of the present paper is to examine explicitly the effects that use of electronic networks for transactions with suppliers has on firms' degree of virtualization. In so doing, we also highlight factors that influence the use of networks for coordination with suppliers, and the impact such use has on coordination success. Contrary to much recent speculation, the use of electronic networks for transactions was not associated with increased outsourcing, but rather with greater dependence on internal production. Moreover, the use of interpersonal relationships for coordination, which many think of as an alternative to electronic network use, was positively associated with greater network use. Surprisingly, use of electronic networks was negatively associated with such outcomes as order quality and efficiency, and satisfaction with suppliers, while more reliance on personal linkages was associated with better outcomes and mitigated the negative consequences of using electronic networks.

Keywords: Virtual Organizations; Coordination; Interfirm Transactions; IT Networks; Outsourcing (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (18)

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